- July 27, 2020 at 7:28 am #578147
Question 3 form chapter 5 of open tuition material:
PPE bought on 1 Jan 2012 for 25 million
Useful life – 10 yrs
On Dec 2014 remaining life was estimated as 5 years.
Ans:SFP- 14000 and SPL- 3500
2500( calculated using previous fig)
1000- will this amount be deducted from retained earnings and 2500 will be charged to SPl, or entire amount will be charged to (3500) SPL
- July 27, 2020 at 8:09 pm #578330P2-D2Keymaster
The 3,500 is charged in full through profit or loss. The 1,000 is a reserve transfer through the statement of changes in equity that will reduce the retained earnings.
- July 28, 2020 at 5:41 am #578438
Thanks for your reply tutor,
Dr Depreciation. 3500
Cr Accumulated depreciation (SPL) 3500
Dr Revaluation reserve 1000
Cr Retained earnings. 1000
Is this entry right?
Also in open tuition material answer ,
in SFP only PPE – 14000 is shown
Should we also mention
Retained earnings- 1000(in SFP)
- August 1, 2020 at 7:28 am #578883P2-D2Keymaster
You’re welcome. Yes, your double entries are correct, however I’d not show the figure you state in the SFP extract. There is too much happening in retained earnings to show the figure.
- August 1, 2020 at 5:19 pm #578925
Thank you tutor
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